At a glance
Construction output remains in contraction but business optimism has rebounded to its highest level since May 2025, supported by a robust tender pipeline.
Government is doubling down on long-term infrastructure, nuclear and clean energy commitments, even as insolvency risks stay elevated.
London has secured up to £11.7bn for a new decade-long social and affordable housing programme, signalling renewed public sector housing ambition.
New national frameworks for advanced nuclear, carbon storage and onshore wind are reshaping the UK’s energy and infrastructure investment landscape.
Skills funding initiatives are ramping up against a backdrop of labour shortages, visa constraints and pending Building Safety Levy implementation.
Today’s update: early 2026 data shows a construction sector still in negative growth but stabilising, with rising confidence underpinned by tenders, infrastructure commitments and housing funding. At the same time, skills, insolvency risk and regulatory change are tightening the delivery environment across property, energy and major projects. Here’s what you need to know to stay ahead today.
Ongoing Stories
Returning to the theme of pipeline resilience, new market forecasts now put the UK construction market above £390bn in 2026, with infrastructure output expected to grow 4.4% despite continued concerns over skills, insolvencies and delivery risk. (Sources: Opus LLP, Freemont Building, RICS, Investing.com)
Following earlier coverage of central government’s push on major schemes, commitments to HS2 Euston, the Lower Thames Crossing, Sizewell C and the DLR Thamesmead extension are reiterated as core drivers of 2026 workbanks, even as capacity and cost pressures mount. (Sources: Gov.uk, Slaughter and May, YouTube)
Building on recent reporting around planning reform, the National Planning Policy Framework consultation and onshore wind’s return to the NSIP regime add further detail to the shift towards a more “rules-based” and centralised planning environment for housing and energy. (Sources: House-Builder.co.uk, Slaughter and May)
Top 5 Headlines
💰 Construction output still falling but confidence turns a corner. Entering 2026, UK construction output remained in negative territory for the 13th consecutive month, though the rate of decline was the slowest in seven months. Business optimism has climbed to its highest level since May 2025, supported by indications of stronger activity later in the year. On 5 February, 10 new UK tenders worth over $103m were issued, underlining solid procurement intent even as awards remain thin. This combination of softer output and stronger sentiment suggests contractors must bridge a short-term dip while positioning for a potentially busier second half of 2026. (Source: Building.co.uk, Construction News, IndexBox, Ambrey Baker)
🏗️ UK construction market forecast to top £390bn in 2026. New analysis indicates the UK construction market is expected to exceed £390bn this year, with overall construction growth projected at 2.3% and infrastructure output forecast to expand by 4.4%. The outlook is supported by public sector and infrastructure spending, but comes alongside record insolvencies, tight working capital and heightened risk particularly for smaller firms. For investors and tier ones, the data points to a growing market in aggregate but with sharper scrutiny needed on counterparties and balance sheet strength down the supply chain. (Source: Opus LLP, Freemont Building, RICS, Investing.com)
🏗️ London secures up to £11.7bn for new social and affordable homes. The London Social and Affordable Homes Programme 2026–36 has been allocated up to £11.7bn, with bidding now open for providers aiming to deliver thousands of new social rent and affordable homes over the next decade. The programme targets accelerated delivery in the capital, including around key transport hubs, and dovetails with wider planning reforms focused on housing near railway stations. This represents a major long-term pipeline for developers, housing associations and contractors able to navigate funding criteria and evolving building safety requirements. (Source: London.gov.uk, House-Builder.co.uk)
🌱 Advanced Nuclear Framework sets new direction for UK nuclear build. The UK Government has published its Advanced Nuclear Framework, setting out how advanced nuclear technologies will support net zero targets and future power system needs. The plan sits alongside a £385m Advanced Nuclear Fund and existing commitments to Sizewell C, and is complemented by upcoming regulatory reforms for heat and hydrogen networks. For the supply chain, this signals a clearer long-term route map for nuclear-related civils, manufacturing and grid infrastructure, with policy risk gradually being replaced by programme delivery risk. (Source: Gov.uk, Slaughter and May, EdenSeven)
🌱 Great British Energy launches £1bn Local Power Plan for community projects. The newly published Great British Energy Local Power Plan commits up to £1bn for community clean energy schemes, including solar installations on public buildings. The initiative sits alongside expectations that solar PV auctions in Allocation Round 7 will clear at around £63–68/MWh, delivering 3.5–4.5GW by 2028–31 towards a 45–47GW solar fleet by 2030. This package will generate a significant pipeline of distributed energy projects, offering opportunities for contractors and consultants aligned to smaller-scale, repeatable delivery. (Source: Gov.uk, Maddyness, Slaughter and May)
Also in the news
🚆 The North Sea Transition Authority has launched its second carbon storage licensing round, with applications due by 24 March 2026, opening further opportunities in CO₂ transport and storage infrastructure. (Source: Gov.uk)
🌱 Onshore wind is re-entering the Nationally Significant Infrastructure Projects regime under the Planning and Infrastructure Act, with higher scale thresholds intended to speed decisions on larger schemes. (Source: Slaughter and May)
🏛️ Government has announced enhanced funding and initiatives to train the next generation of construction workers, adding to wider 2026 reforms on building safety, payment practices and insolvency. (Source: Gov.uk, PBC Today, Gowling WLG)
🏗️ Taylor Wimpey reports muted demand and margin pressure into 2026 after delivering 11,229 homes in 2025, including 2,220 affordable units, underscoring continued headwinds in volume housebuilding. (Source: Homebuilding.co.uk, TLT)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If today’s briefing is useful, consider forwarding it to a colleague working on 2026 budgets or bids. Keeping teams aligned on market direction and policy shifts can sharpen both risk management and opportunity spotting.